Credit Card Calculators

UK Credit Cards

UK credit cards are no different from those in most other leading
economies. Money, especially in these days of electronic banking, is
international, and so are the rules and the systems governing it. The
big names in the credit card industry – Visa, MasterCard and American
Express – are virtually(continued)

No cards found.

(Continued) everywhere, including the UK.

With basic interest rates among international trading partners virtually
in lockstep, interest rates in the UK are not much different from those
in North America, with some notable exceptions. Many UK credit cards
have 0% balance transfers, too.

There are cards for those with poor credit, others that provide rewards
or cash back, and the virtual credit card that prevents online fraud was
developed in Ireland.

Virgin, Egg and Marbles are leading UK credit card providers whose names
are not familiar to most people in North America. Virgin, however, is
issued by MBNA, a familiar name in the U.S.

Significant differences
Having said that, there are some significant differences with respect to
UK credit cards in comparison with those in North America or in
neighboring France. In fact, there are significant and confusing
differences within the UK itself. There are 12 different ways in which
credit card providers in the UK start to apply interest to credit card
balances. Some cards, such as Lloyds TSB Advance charge interest on all
transactions from the day they are debited, even if you pay your credit
card bill by the due date.

Look for cards that start to charge interest at the latest possible
date. Look, also, at the number of interest free days a card offers.
Alliance & Leicester online credit card, Bank of Scotland Visa and
Barclaycard offer 59 interest-free days, more than twice as long as
cards in North America. Smile is just 46 days.

There are credit bureaus in the UK, as there are in North America, much
to the envy of the French credit card industry where such agencies do
not exist. That tends to lead to higher APRs in France. But the British
are not entirely satisfied with the level of credit information
available. The leader of one non-profit consumer advocacy agency said:
"We feel that there should be more sharing of both positive and negative
information, which would prevent indebtedness because it would make
credit companies lend responsibly."

A number of suicides in the UK have been attributed in part to credit
card debt. This has led to calls for companies to share total loan
balance information with each other.

High rates a crime in France
But while the French don't have credit bureaus, they do have laws
against usury, something lacking in the U.S. and UK. In fact, a card
issued by one UK institution had an APR of 64.9% in 2005. Not for those
who carry balances on their cards, obviously. The Bank of England base
rate was just 4.75 percent at the time. Such a rate is a crime in
France, where the upper limit was then about 20%.

British privacy laws make targeting potential customers more difficult
for UK credit card issuers than they do for those in the U.S. This can
result in some amusing stories for the media. One well-known bank in
2003 offered a small dog a gold card with a credit limit of $18,540.
Another bank, the following year, signed up a homeless man and gave him
a credit limit of about $500.

The question in the UK is how to provide the lenders with enough
information so that they can offer the cheapest loans to consumers who
are the lowest risk without providing too much information that could be
used by unscrupulous marketers.